Confidence among Welsh businesses has returned to positive territory following news of COVID vaccines, in spite of sharp declines in sales and profits, a survey of chartered accountants has found.
But business confidence in Wales was lower than in other areas of the UK, a possible reflection of post-Brexit trade disruption given Welsh companies’ dependence on exports to the EU, ICAEW’s Business Confidence Monitor for Q1 2021, published this week.
Domestic sales, exports and profits all fell significantly year-on-year.
Welsh businesses reduced their employee numbers by 0.3%, but the fall would probably have been deeper if not for Government support. The continuation of the furlough scheme should help limit job losses in the early part of this year.
The year ahead
Companies in Wales predict that – if the vaccine rollout is successful – domestic sales will increase by 4.8%, with exports expected to increase by 0.1%, though there is some uncertainty to this outlook.
It would be good to mention that businesses think the roll-out of vaccines will support a return to growth. But important to say there is uncertainty to this outlook.
Profits are predicted to grow by 4.2% and employment by 1.2%.
When asked about the growing challenges they faced, three in 10 businesses said late payments and a quarter said customer demand. Accessing new areas was a growing problem for a quarter of businesses.
Beverley Waters, ICAEW Acting Regional Director for Wales, said:
“The news of a coronavirus vaccine has helped life confidence among Welsh businesses back into positive territory, but companies still face a number of challenges.
“As we look to the year ahead, it’s important the Chancellor uses next month’s Budget to lay the foundations for the UK’s economic recovery.
“We want to see the Budget focus on providing a bridge to sustainable and resilient economic recovery, getting people back into work, helping exporters, and greater investment in digital technology to make our businesses competitive in the 21st Century.”